Baseband Protection - Updating to 4.1 using TinyUmbrella will protect your baseband from update. THIS ONLY APPLIES TO IPHONE 4!!!!! If you have a 3G or 3GS and you update to 4.1 your baseband will likely be updated.

SHSH Retrieval from Cydia - If you don't have your SHSH locally, TinyUmbrella will request them from Cydia on-demand; allowing the restore to continue

Automatically point hosts to Cydia - Once you close TinyUmbrella, it points your hosts file to Cydia (for further baseband protection and update/restores without TinyUmbrella)

My GUESS is that because the baseband on iphone 4 now requires shsh blobs (source theiphonewiki) that all you have to do to prevent the upgrade from happening is to simply not sign the baseband shsh blob.